Pendle to Retire vePENDLE as Protocol Shifts to Liquid Governance Token

Pendle, a decentralized finance protocol focused on yield trading, will begin phasing out its vePENDLE governance token this month as part of a major token design overhaul aimed at driving wider user participation.

The protocol announced on Monday that vePENDLE will be replaced by sPENDLE, a new liquid staking and governance token. The change will roll out in stages, starting with the launch of sPENDLE staking on Tuesday. New vePENDLE locks will be paused on Jan. 29, followed by a snapshot of existing balances to support the transition.

Pendle said the new system is meant to reduce friction for users while keeping governance and fee sharing intact.

Shift Away From Long Lockups

The protocol said vePENDLE’s structure had limited participation despite strong growth in the core platform. One of the main issues was long lockup periods, which prevented users from accessing funds until preset timelines expired.

Under the new system, sPENDLE can be withdrawn after a 14 day cooldown or instantly by paying a 5% fee. Pendle said this gives users more control while keeping incentives aligned with the protocol.

sPENDLE will replace vePENDLE as the main governance token once the new governance framework goes live on the same day as the snapshot.

Interoperability and Simpler Governance

Another issue with vePENDLE was that it was non transferable, limiting its use across DeFi. Pendle said sPENDLE will be supported across multiple platforms, allowing it to be used in areas such as restaking and other yield strategies.

Governance will also change under the new setup. Previously, users needed to vote every week to earn rewards, a process Pendle said proved too complex for most holders. While the system generated more than $37 million in revenue during 2025, rewards were largely captured by a small group of highly active participants.

Under sPENDLE, holders will only need to vote on key protocol proposals to remain eligible for rewards. If no vote is active, eligibility will continue automatically.

Revenue Use and Protocol Size

Pendle said it will use up to 80% of protocol revenue to buy back PENDLE tokens and distribute them as governance rewards under the new model.

According to DeFi Llama data, Pendle currently ranks as the 13th largest DeFi protocol by total value locked, with nearly $3.5 billion on the platform. The team said the token changes are intended to better align governance, liquidity, and user participation as the protocol scales.

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